The thermal behavior of core-shell carbon-coated lithium iron phosphate (LiFePO4-C) nanoparticles made by flame spray pyrolysis (FSP) during annealing was investigated by in-situ transmission electron microscopy (TEM), in-situ X-ray powder diffraction (XRD) as well as ex-situ diffuse reflectance infrared Fourier transform spectroscopy (DRIFTS). Crystallization of the initially glassy LiFePO4-C nanoparticles starts at quite low temperatures (T=400 °C), forming single crystals inside the confinement of the carbon shell. Upon increasing the temperature to T≥700 °C, LiFePO4 starts to diffuse through the carbon shell resulting in cavities inside the mostly intact carbon shell. By increasing the temperature further to T≥800 °C, the initial core-shell morphology converts into open carbon shells (flakes and cenospheres) and bulky LiFePO4 particles (diameter in the range 300–400 nm), in agreement with ex-situ experiments.